What is a Revocable Trust?

A revocable trust is a trust with provisions that can be altered by the grantor. Sometimes a revocable trust is referred to as a 'living revocable trust.'

How Does a Revocable Trust Work?

A trust is a legal instrument that allows property to be passed to heirs and beneficiaries without going through probate (i.e., state directed distributions of assets upon death). A revocable trust gives the full control of the assets held in the trust to the grantor (i.e., the person setting up the trust). In addition, all incomes and distributions from the assets in the revocable trust are given to the grantor during their lifetime.

Why Does a Revocable Trust Matter?

Revocable trusts are an important way to ensure that assets will be passed along to heirs, especially in cases of sudden incapacity or death by the grantor. However, there is no tax savings to the grantor or the beneficiaries by having their assets in a revocable trust.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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